Deferment of SHEFA student loans proposed

Just weeks after announcing plans to run after default scholars, Saipan Higher Education Financial Assistance officials are now singing a different tune and are thinking of allowing students to put off paying for their loans until they are capable of doing so.

This was the theme of the SHEFA board’s discussion on Monday, citing the economic contraction and the difficulty of finding jobs as the main reason for the change of heart.

Board chair Jose Mafnas instructed program administrator Henry Hofschneider to come up with a recommendation at their next meeting as to how long the loan deferment could be made for affected scholars.

The board is looking at providing a one-year loan deferment, a period that Hofschneider believes may be too long. He prefers recommending a less than 60-day deferment of student loans and on a case-to-case basis.

SHEFA regulations require scholars who have already graduated to return to the islands within 90 days to work either in government or the public sector for an equal amount of time that they received financial assistance from the program. Failure to return and fulfill this requirement will result in the automatic conversion of their grants into loans that must be repaid to the government.

This rule, however, has been rarely followed. Since the program’s inception in 2004, only a few graduates have returned to the islands while a large number have chosen to stay and work in the U.S. mainland.

During Monday’s board meeting, Hofschneider reported that four newly graduated scholars have recently asked for a deferment on their payments until they come up with a final decision.

He said that SHEFA stands to collect about $55,000 from two of these four scholars, representing three to four years of getting grants from the program.

“If the board will approve the payment deferment, I would recommend to adopt not more than a six-month period because I understand the competitive situation in finding a job,” he told reporters.

The government has already invested some $17.7 million in the SHEFA programs since its inception six years ago. From May 2006 through December 2010, however, SHEFA collected just about $13,577 from default scholars.

Hofschneider admitted that SHEFA has no records of these default scholars and will start working on them next month.